No economic safety left in the Union after Brexit, claims Sturgeon

BREXIT has shown the UK can no longer be trusted as a financial “safe harbour”, Nicola Sturgeon said yesterday, as she warned Scotland would be billions of pounds worse off outside the EU and dropped fresh hints about a second independence referendum.

Repeating her belief that a second referendum was “highly likely” because of June’s vote, the First Minister said: “Those who have previously argued that the UK somehow gives financial security and certainty to Scotland – that argument is bust, frankly.

“We know that Brexit, if we don’t find a way of protecting our relationship with EU and particularly our membership of the single market, will deliver a significant hit to our economy and our public finances and that is the reality.”

Opposition parties accused her of using Brexit to distract from today’s publication of the 2015-16 Government Expenditure and Revenue in Scotland (GERS) figures, expected to show a deficit of more than £15bn.

Ms Sturgeon instructed her officials to begin work on legislation for a second referendum within hours of the UK voting 52-48 to leave the EU and Scots voting 62-38 to remain.

Asked about its progress, she said the legislation was “underway and progressing” and promised more details in her annual Programme For Government statement in a fortnight.

However she is not expected to introduce a bill at this stage.

She also said she would appoint a new dedicated Brexit minister to work with Westminster before the Article 50 withdrawal process is triggered process and in ensuing negotiations.

The post is likely to go to an existing member of her cabinet in a mini-reshuffle.

Ms Sturgeon was speaking after the Scottish Government issued a report on the impact of Brexit on GDP and taxes based on projections from the Treasury and economic think tanks.

In the worst case scenario, Scottish GDP would be £11.2bn or 7.9 per cent a year lower than it would be without Brexit by 2030, and tax revenues could be £3.7bn or 13 per cent down.

The most benign scenario was for the UK to become a member of the European Economic Area, like Iceland or Norway, retaining access to the single market while contributing to the EU budget and bound by, but no longer influencing, EU regulations.

Bilateral trade agreements, such as those struck by Canada and Switzerland, were seen as worse, with the direst outcome a “hard Brexit” in which the UK was forced back onto World Trade Organisation rules and UK exports attracted EU tariffs.

The report, the first in a series planned by the SNP government on Brexit, concluded every alternative would mean lower economic growth than “full EU membership”.

Ms Sturgeon said: “The old argument that the UK somehow offers financial security for Scotland no longer holds water. Brexit will be deeply damaging to Scotland’s economy and to our finances. I said the morning after the referendum that we would pursue all options, including the option of independence to achieve this, and that remains the case.

“If it turns out not to be possible to protect Scotland’s interest through the UK, it must be open to the Scottish people to consider afresh, and in this very different context, the question of independence. However, I am very clear that we will enter these UK discussions in good faith.”

She said the “deafening silence” from Prime Minister Theresa May and Chancellor Philip Hammond on Brexit was “increasingly negligent”.

Scottish Tory leader Ruth Davidson said the SNP was preparing another “constitutional war with Westminster” to deflect from the “underlying fragility” of Scotland’s economy.

She said: “People didn’t vote for a Government so it could work up ways to reheat an independence referendum whose result it promised to respect. Nor to suddenly declare a political union in Brussels as sacrosanct in order to trash a union here.”

Scottish Labour Leader Kezia Dugdale said: “The publication of GERS figures will make clear the benefit Scotland gets from the pooling and sharing of resources across the UK.”

“It is completely and utterly misleading to suggest otherwise.”

Scottish LibDem leader Willie Rennie said: “Instead of offering bogus solutions to the Brexit chaos the First Minister should solve the problems of poor mental health services, a faltering education system and a police service under real strain,” adding Ms Davidson had “a brass neck to talk about Brexit without apologising for the chaos that her party has inflicted”.

Alastair Cameron, director of Scotland in Union, added: “By rushing out these speculative Brexit figures in a cynical attempt to muddy the waters ahead of GERS, Nicola Sturgeon has all but admitted she has no answers to the economic questions about independence.”

Grant Allan, deputy director of Glasgow University’s Fraser of Allander Institute, said there was “little that is new” in the Scottish Government analysis.

A UK Government spokeswoman said: “The analysis warns of short-term economic uncertainty. But the real uncertainty for Scotland’s economy is being caused by Nicola Sturgeon’s talk of a second independence referendum.”

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